Which Markets Would Sellers Choose if They Could? - Wishful Thinkink and Monopolistic Competition
The question "which utility function would homo oeconomicus choose if he could?" (Frank, 1987) is answered for interactive markets where sellers are assumed to freely choose their dependency on the other's market behavior. We first solve the market for all possible constellations of mutual dependencies and derive then the unique mutually desirable constellation of market interdependency: The sellers dream of the best market, but not necessarily to be monopolists! It is finally discussed how this result is related to the evolutionary justification of monopolistic competition (Güth and Huck, 1997) or altruism (Bester and Güth, 1998).
Year of publication: |
1999
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Authors: | Güth, Werner |
Published in: |
Homo Oeconomicus. - Institute of SocioEconomics. - Vol. 15.1999, p. 491-495
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Publisher: |
Institute of SocioEconomics |
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